State Farm launches Mac-attack on Payment case with missiles, ground fire and bomb to keep MID market conduct exam from jury

Will Dr. Payment fold like McIntosh under this pressure?

Payment v State Farm, introduced here in a post that published on the 5th of December, became the target for a Mac-attack that same day.  Before the attack ended a day later., State Farm attorney John Banahan had launched a dozen wind-to-water missiles of motions in limine, including three with memorandum in support.

Six docket entries that followed were ground fire for the bomb to come.

  • Supplemental NOTICE of Service of Disclosure by Michael Payment
  • Supplemental Designation of Experts by State Farm Fire and Casualty Company
  • NOTICE of Service of Response to Interrogatories by State Farm Fire and Casualty Company
  • NOTICE of Service of Disclosure by State Farm Fire and Casualty Company
  • NOTICE of Service of Supplemental Opinions of Defendant’s Experts in Response to Supplemental Opinion of Neil B. Hall, Ph.D. by State Farm Fire and Casualty Company re Designation of Experts
  • RESET HEARING: Final Pretrial Conference RESET for 12/22/2008, 1:30 P.M., before District Judge L. T. Senter Jr

Then, today, State Farm dropped a bomb  – NOTICE of Offer of Judgment by State Farm Fire and Casualty Company.

More than 10 days before the trial begins, a party defending against a claim may serve on an opposing party an offer to allow judgment on specified terms, with the costs then accrued.

If, within 10 days after being served, the opposing party serves written notice accepting the offer, either party may then file the offer and notice of acceptance, plus proof of service. The clerk must then enter judgment.

An unaccepted offer is considered withdrawn, but it does not preclude a later offer. Evidence of an unaccepted offer is not admissible except in a proceeding to determine costs.

When one party’s liability to another has been determined but the extent of liability remains to be determined by further proceedings, the party held liable may make an offer of judgment. It must be served within a reasonable time – but at least 10 days – before a hearing to determine the extent of liability.

If the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made.

The same gut-the-case strategy used to pressure the McIntosh case to settlement is evident in this listing of the 12 motions in limine filed by State Farm.

Motion in limine #1 : For Phased Trial and to Preclude Evidence of or Reference to Negligence, Other Tort Claims, and Claims For Extra-Contractual and Punitive Damages Prior to a Finding of Coverage Under the Policy [[with] memorandum in support

Motion in limine #2 to Exclude Certain Inaccurate, Confusing and Misleading Evidence

Motion in limine #3 Limiting Testimony or Evidence Relating to Insurance Department Bulletins and Related Correspondence

Motion in limine #4: to Preclude Plaintiff From Introducing Testimony or Evidence That Waiver of Estoppel Create or Modify Coverage

Motion in limine #5: to Exclude Evidence Of Or References to Any Grand Jury or Government Investigation Relating to Defendant’s Response to Hurricane Katrina

Motion in limine #6: to Exclude Evidence Regarding Claims Handling of Losses For Properties Other Than Plaintiff’s Property

Motion in limine #7: to Preclude Testimony or Evidence Relating to Interpretation of Insurance Policy Provisions or Principles of Mississippi Law and to Exclude the Wind/Water Claim Handling Protocol

Motion in limine #8: to Exclude Evidence of Out-of-State Conduct [with] memorandum in support

Motion in limine #9: to Preclude Testimony or Evidence That Plaintiff’s Home Was Completely Destroyed by Wind

Motion in limine #10: For a Ruling That (i) Plaintiff’s Acceptance of a Flood Insurance Payment Constitutes an Admission That At Least ThatAmount of Flood Damage Occurred And (ii) The Flood Insurance Payment Must Be Offset Against Any Recovery Under Plaintiff’s Homeowners Insurance

Motion in limine #11: to Preclude Plaintiff From Identifying, Using or Referencing Any Unproduced Evidence or Witnesses For Use At Trial

Motion in limine #12: to Exclude Testimony Or Evidence Relating to The Market Conduct Report [with] memorandum in support

Several of these motions are of particular interest, starting with the missile in limine to shut down the use of the MID report in this case and, no doubt, set precedent for others.  The three page Motion is a straight forward request with just a hint of what’s to come in the supporting memorandum.

Defendant State Farm Fire and Casualty Company (“State Farm Fire”) hereby moves the Court…for an Order in limine excluding any evidence, testimony, or argument relating or referring to the “Report of the Special Target Examination (Katrina Homeowner Claims)” commissioned by the Mississippi Department of Insurance (hereinafter referred to as the “Market Conduct Report” or the “Report”)…

As set forth in the accompanying Memorandum of Law, incorporated herein by reference, the Market Conduct Report reviews claims handling in general terms, based on a limited, unrepresentative sample of homeowners claims. The Report does not address or relate in any way to the specific damage to Plaintiff’s property or to Plaintiff’s individual claims. (emphasis added).

The memorandum in support puts Commissioner Chaney in the hot seat by first quoting from the report –

…[t]his report is not intended for any purpose other than to communicate to the Commissioner of Insurance of the State of Mississippi the findings and results of test work and investigative activities performed during the course of this special target examination. This report should not be used by the company examined or any other entity or person(s) for any other purpose not specifically approved by the Commissioner of Insurance for the State of Mississippi.

– and then emphasizing the Commissioner has the authority to authorize the use of the report by State Farm and the company’s policyholders in the resolution of outstanding claims of damage from Hurricane Katrina.

Thus, by its own terms, the Market Conduct Report is not to be used for any purpose other than that specifically approved by the Commissioner of Insurance.

Not only is State Farm challenging the Commissioner to choose between the Company and its policyholders with disputed claims over three years after Katrina, he has also been put in an equally difficult position by State Farm’s claim the report

reviews claims handling in general terms, based on a limited, unrepresentative sample of homeowners claims, and does not relate in any way to the specific damage to Plaintiff’s property or to Plaintiff’s individual claims.

– a claim that is simply yet another example of State Farm playing word games.

The sample is representative of the subset of the homeowner claims with wind-water damage; and, therefore, representative of Dr. Payment’s claim and the findings from the examination of this sample were specific, not general, in nature.

It’s a bit late for State Farm to express reservations about a report that it heavily promoted when it was released less than two months ago.

“This report confirms what we have always maintained — that State Farm settled the vast majority of policyholder claims quickly and satisfactorily despite their enormous volume and complexity,” said State Farm spokesman Jeff McCollum. “The report clearly shows that examiners found no violation of state law or regulation, allegations of fraud and abuse were baseless, and where mistakes were discovered in claims handling, we corrected them.”

Moving up the list of motions in limine with just a brief comment on number 10, a request for the Court to rule on two questions related to the NFIP.  If State Farm’s motion correctly represents these issues, it is time for the courts to reconsider.

Some policyholders have said they were told to accept flood payments pending resolution of their claims.  However, even more troubling to me is the practice of offsetting claims when private coverage and the NFIp are two distinctly different obligations.  Note the word game in this motion is the reference – Plaintiff was paid policy limits of $250,000 under his State Farm flood insurance policy for flood damage to his dwelling….

Up next to #7 and this pure bull shit –

State Farmanticipates that Plaintiffmay incorrectly argue that evidence of claimhandling guidelines or proceduresmight be relevant or admissible on the question of coverage, i.e., whether theweather forces of Hurricane Katrina that damages Plaintiff’s property comes within the language of the homeowners policy Plaintiff’s claim have no bearing on the question whether Plaintiff’s loss is covered and, if so, the extent of any covered damages..

These materials are thus irrelevant to the coverage issues before the Court and jury and may not be admitted into evidence for purposes of determining coverage…
Any claim handling guidelines or procedures that State Farm may have used in adjusting or handlingIn the event the trial proceeds to extra-contractual and punitive damages, State Farm anticipates that Plaintiff may seek to introduce evidence of a particular claim handling guideline, State Farm’sWind/Water Claim Handling Protocol.

For the reasons set forth below, that documents does not evidence bad faith or other culpable conduct, and this Court should therefore rule that it is not admissible for any purpose…

These motions are full of land mines like this attempted exclusion of the claims handling process and wind water protocol.

The bottom line, however, is what will Dr. Payment do in response to the Offer of Judgment?

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